The 2025 investment landscape

As Australian investors look toward 2025, the investment climate presents both emerging opportunities and significant challenges. The intertwining of global economic uncertainties, domestic policy changes and fluctuating interest rates shape a complex outlook that demands strategic foresight and adaptability. Here, Apt’s Chief Investment Officer, Sarah Gonzales, shares her insights.

Global uncertainty paired with optimism

According to Sarah, the overarching theme for the investment outlook is “uncertainty”. However, this uncertainty is intertwined with a palpable sense of optimism. “The uncertainty we are seeing now is primarily driven by geopolitical tensions and the economic policies of major nations such as the United States, but the Trump administration’s pro-growth, pro-business stance has the potential to buoy US equity markets,” says Sarah. Closer to home, Sarah says it’s a case of wait and watch as some of Trump’s proposed policies cast a shadow of unpredictability on global equities. “The crux of the issue lies in how these policies will affect global equities,” Sarah says. “With China being a close trading partner to Australia, any tariffs the US imposes could have a notable impact here at home.” She advises investors to carefully balance international exposures with domestic opportunities.

Domestic policies and their implications Within Australia, recent government policies aimed at addressing social and economic issues are expected to have ripple effects across various sectors. Notably, the Labor government’s initiatives targeting first home buyers and early education indicate a shift towards policies that not only address immediate societal needs but also attempt to stimulate economic activity.

Sectors related to real estate, construction and education may benefit in light of these policies; however, Sarah counsels that passing new policies will prove challenging, with forecasts either party will have a minority government.

The election and market sentiment

With the next federal election due in 2025, political outcomes will significantly influence market sentiment. The anticipation of election results often leads to market volatility in response to proposed policies by the campaigning parties, but as Sarah notes, “History shows that markets tend to correct themselves post-election, so this shouldn’t be cause for alarm.”

Interest rates remain an area to watch

Interest rates continue to be a decisive factor for investment decisions in Australia. “Despite central banks’ actions to lower interest rates, ongoing uncertainty lingers over whether these cuts will continue. The potential inflationary impact of Trump’s policies could ripple through global economies, challenging central banks’ efforts to control inflation and influence interest rates,” says Sarah. “What’s really going to drive investment markets is how these economic factors unfold in the coming years. We’re starting to hear the word ‘recession’ pop up, and at any mention, markets respond,” she adds. Sustainability remains a hot topic, but some investors have cooled In the last year, investors have cooled on some areas of sustainable investing, with returns not keeping up with the rest of the market. Sarah points out that with the rapid growth of artificial intelligence (AI) and its uses in almost every domain, the energy required to power the AI age is a challenge.

“As it stands today, renewables alone simply can’t meet the power demand created by the swift rise of AI – and there is a dawning realisation that the push to net zero has become even more challenging,” Sarah says. However, she points out that AI may well be a catalyst for creating new pathways for sustainability, and it’s undoubtedly an area that investors should watch. “Sustainable investments should remain part of a balanced portfolio,” she counsels.

A long-term investment philosophy remains the best approach

Amid this uncertainty, the principles of long-term investment remain critical for navigating investment in 2025, according to Sarah.

“Considering the economic and political landscape, diversifying investments to mitigate risks while seizing growth opportunities in emerging sectors is a prudent approach,” Sarah says.

“Apt’s investment philosophy, which emphasises quality and diversified investments, offers a framework to build resilient portfolios.”

So how should you approach investing in 2025?

Sarah says if you have a solid, long-term investment strategy, it’s important to stay the course. “The key lies in maintaining a balanced portfolio that can withstand geopolitical shocks while capitalising on domestic growth sectors. Staying informed, adaptable and committed to foundational investment principles will be crucial as we navigate some uncertainty in global markets,” she concludes.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.